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Events
2009 Events
 Lecture on "Falling Behind: Income Inequality and Middle Class Disaffection"
17 November 2009
Professor Robert H. Frank
H. J. Louis Professor of Management and Professor of Economics, Johnson Graduate School of Management, Cornell University
For more than thirty years, Singapore’s economic growth was accompanied by improvements in our income distribution. Growth benefited all segments of society, often with lower income earners making larger gains than higher income ones. But as in many other developed countries, Singapore’s growth over the last decade or so has been more unevenly distributed. Rapid economic growth has favored the highly skilled and educated much more than others. Median household incomes have also risen more slowly than incomes in the top deciles. Income inequality has thus widened significantly since the mid-1990s.
Most economists attribute the widening income disparities experienced in most OECD countries to the forces of globalization and technology. The entry of millions of low-wage workers into the global economy has depressed the incomes of the less skilled, while global competition for talent and rapid technological advances have pushed up incomes of the highly skilled.
Professor Robert Frank, author of the ground-breaking book Falling Behind, shows that there are other important dynamics at work behind the rising inequality phenomenon. In particular, he argues that the rise in inequality has much to do with the spread and intensification of "winner-take-all" markets, where small differences in performance translate into enormous differences in economic rewards. The amplification of such markets has also led to what he calls "arms races" or expenditure cascades in which everyone tries to maintain their relative positions by spending more on positional goods. In the US for instance, the rapid growth in purchasing power among top earners has influenced others earning less to also spend more – sometimes beyond their means – stimulating a cascade of additional expenditure across all income groups and reducing aggregate savings. Inequality has imposed not just psychological costs but more tangible ones too, with the middle classes under pressure to borrow more and work longer hours just to compete successfully.
In this lecture, Professor Frank will share his views on how inequality reduces society’s happiness, how arms races in positional goods may be individually rational but collectively irrational, how the current crisis will affect future trends in inequality, and what all this implies for public policy.
Prof Robert H. Frank is the Henrietta Johnson Louis Professor of Management and Professor of Economics at Cornell's Johnson Graduate School of Management and the co-director of the Paduano Seminar in business ethics at NYU's Stern School of Business. His "Economic View" column appears monthly in The New York Times. He received his B.S. in mathematics from Georgia Tech, then taught math and science for two years as a Peace Corps Volunteer in rural Nepal. He holds an M.A. in statistics and a Ph.D. in economics, both from the University of California at Berkeley. His papers have appeared in the American Economic Review, Econometrica, Journal of Political Economy, and other leading professional journals.
His books, which include Choosing the Right Pond, Passions Within Reason, Microeconomics and Behavior, Principles of Economics (with Ben Bernanke), Luxury Fever, What Price the Moral High Ground?, Falling Behind, and The Economic Naturalist, have been translated into 19 languages. The Winner-Take-All Society, co-authored with Philip Cook, received a Critic's Choice Award, was named a Notable Book of the Year by The New York Times, and was included in Business Week's list of the ten best books of 1995. He is a co-recipient of the 2004 Leontief Prize for Advancing the Frontiers of Economic Thought. He was awarded the Johnson School’s Stephen Russell Distinguished teaching award in 2004 and its Apple Distinguished Teaching Award in 2005.
The fee for this lecture is $53.50, incl. GST. Please register early as seats will be reserved on a first-come-first-served basis.
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